ERICSSON (LM) TEL-SP ADR (ERIC) Stock Fundamental Analysis
NASDAQ:ERIC - Nasdaq - US2948216088 - ADR
Overall ERIC gets a fundamental rating of 5 out of 10. We evaluated ERIC against 51 industry peers in the Communications Equipment industry. ERIC has a medium profitability rating, but doesn't score so well on its financial health evaluation. ERIC is not valued too expensively and it also shows a decent growth rate.
1. Profitability
1.1 Basic Checks
ERIC had positive earnings in the past year.
ERIC had a positive operating cash flow in the past year.
Of the past 5 years ERIC 4 years were profitable.
In the past 5 years ERIC always reported a positive cash flow from operatings.
1.2 Ratios
ERIC has a Return On Assets of -0.50%. This is in the better half of the industry: ERIC outperforms 66.67% of its industry peers.
The Return On Equity of ERIC (-1.58%) is better than 66.67% of its industry peers.
The Return On Invested Capital of ERIC (10.19%) is better than 84.31% of its industry peers.
The Average Return On Invested Capital over the past 3 years for ERIC is in line with the industry average of 11.02%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | -0.5% | ||
| ROE | -1.58% | ||
| ROIC | 10.19% |
ROA(3y)1.29%
ROA(5y)2.22%
ROE(3y)2.65%
ROE(5y)6.16%
ROIC(3y)11.39%
ROIC(5y)10.81%
1.3 Margins
ERIC's Operating Margin of 8.16% is fine compared to the rest of the industry. ERIC outperforms 78.43% of its industry peers.
In the last couple of years the Operating Margin of ERIC has grown nicely.
With a Gross Margin value of 43.44%, ERIC perfoms like the industry average, outperforming 58.82% of the companies in the same industry.
ERIC's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 8.16% | ||
| PM (TTM) | N/A | ||
| GM | 43.44% |
OM growth 3Y-18.28%
OM growth 5Y8.55%
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y-0.83%
GM growth 5Y2.43%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so ERIC is still creating some value.
The number of shares outstanding for ERIC remains at a similar level compared to 1 year ago.
Compared to 5 years ago, ERIC has more shares outstanding
The debt/assets ratio for ERIC is higher compared to a year ago.
2.2 Solvency
ERIC has a debt to FCF ratio of 1.11. This is a very positive value and a sign of high solvency as it would only need 1.11 years to pay back of all of its debts.
ERIC has a Debt to FCF ratio of 1.11. This is in the better half of the industry: ERIC outperforms 74.51% of its industry peers.
ERIC has a Debt/Equity ratio of 0.44. This is a healthy value indicating a solid balance between debt and equity.
Looking at the Debt to Equity ratio, with a value of 0.44, ERIC is doing worse than 66.67% of the companies in the same industry.
Although ERIC does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.44 | ||
| Debt/FCF | 1.11 | ||
| Altman-Z | N/A |
ROIC/WACC1.61
WACC6.34%
2.3 Liquidity
A Current Ratio of 1.19 indicates that ERIC should not have too much problems paying its short term obligations.
Looking at the Current ratio, with a value of 1.19, ERIC is doing worse than 82.35% of the companies in the same industry.
ERIC has a Quick Ratio of 1.19. This is a bad value and indicates that ERIC is not financially healthy enough and could expect problems in meeting its short term obligations.
Looking at the Quick ratio, with a value of 0.95, ERIC is doing worse than 80.39% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.19 | ||
| Quick Ratio | 0.95 |
3. Growth
3.1 Past
ERIC shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -72.75%.
The Earnings Per Share has been growing by 48.91% on average over the past years. This is a very strong growth
ERIC shows a very negative growth in Revenue. In the last year, the Revenue has decreased by -11.03%.
Measured over the past years, ERIC shows a small growth in Revenue. The Revenue has been growing by 4.55% on average per year.
EPS 1Y (TTM)-72.75%
EPS 3Y-9.51%
EPS 5Y48.91%
EPS Q2Q%80.9%
Revenue 1Y (TTM)-11.03%
Revenue growth 3Y4.26%
Revenue growth 5Y4.55%
Sales Q2Q%-4.16%
3.2 Future
The Earnings Per Share is expected to grow by 12.10% on average over the next years. This is quite good.
Based on estimates for the next years, ERIC will show a small growth in Revenue. The Revenue will grow by 0.04% on average per year.
EPS Next Y22.79%
EPS Next 2Y22.05%
EPS Next 3Y16.92%
EPS Next 5Y12.1%
Revenue Next Year-7.74%
Revenue Next 2Y-2.31%
Revenue Next 3Y-0.71%
Revenue Next 5Y0.04%
3.3 Evolution
The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 72.67 indicates a quite expensive valuation of ERIC.
The rest of the industry has a similar Price/Earnings ratio as ERIC.
When comparing the Price/Earnings ratio of ERIC to the average of the S&P500 Index (28.29), we can say ERIC is valued expensively.
A Price/Forward Earnings ratio of 15.09 indicates a correct valuation of ERIC.
Based on the Price/Forward Earnings ratio, ERIC is valued a bit cheaper than 74.51% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 24.44. ERIC is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 72.67 | ||
| Fwd PE | 15.09 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, ERIC is valued cheaply inside the industry as 86.27% of the companies are valued more expensively.
Based on the Price/Free Cash Flow ratio, ERIC is valued cheaper than 92.16% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 8.24 | ||
| EV/EBITDA | 9.77 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
ERIC has a very decent profitability rating, which may justify a higher PE ratio.
ERIC's earnings are expected to grow with 16.92% in the coming years. This may justify a more expensive valuation.
PEG (NY)3.19
PEG (5Y)1.49
EPS Next 2Y22.05%
EPS Next 3Y16.92%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.86%, ERIC has a reasonable but not impressive dividend return.
ERIC's Dividend Yield is rather good when compared to the industry average which is at 9.90. ERIC pays more dividend than 88.24% of the companies in the same industry.
ERIC's Dividend Yield is a higher than the S&P500 average which is at 2.28.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.86% |
5.2 History
On average, the dividend of ERIC grows each year by 21.64%, which is quite nice.
ERIC has been paying a dividend for at least 10 years, so it has a reliable track record.
ERIC has not decreased its dividend in the past 5 years, so it has a somewhat stable track record.
Dividend Growth(5Y)21.64%
Div Incr Years5
Div Non Decr Years5
5.3 Sustainability
The earnings of ERIC are negative and hence is the payout ratio. ERIC will probably not be able to sustain this dividend level.
ERIC's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP-667.4%
EPS Next 2Y22.05%
EPS Next 3Y16.92%
ERICSSON (LM) TEL-SP ADR
NASDAQ:ERIC (1/21/2025, 8:00:02 PM)
After market: 8.71 -0.01 (-0.11%)8.72
+0.18 (+2.11%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupTechnology Hardware & Equipment
GICS IndustryCommunications Equipment
Earnings (Last)
Earnings (Next)
Inst Owners40.83%
Inst Owner Change0.08%
Ins Owners0.05%
Ins Owner ChangeN/A
Market Cap29.06B
Analysts55.17
Price Target7.51 (-13.88%)
Short Float %1.14%
Short Ratio1.94
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.86% |
Yearly Dividend2.7
Dividend Growth(5Y)21.64%
DP-667.4%
Div Incr Years5
Div Non Decr Years5
Ex-DateN/A
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-284.38%
Min EPS beat(2)-588.91%
Max EPS beat(2)20.16%
EPS beat(4)3
Avg EPS beat(4)-94.09%
Min EPS beat(4)-588.91%
Max EPS beat(4)160.39%
EPS beat(8)6
Avg EPS beat(8)-34.73%
EPS beat(12)7
Avg EPS beat(12)-23.13%
EPS beat(16)9
Avg EPS beat(16)-15.73%
Revenue beat(2)1
Avg Revenue beat(2)0.49%
Min Revenue beat(2)-0.69%
Max Revenue beat(2)1.67%
Revenue beat(4)1
Avg Revenue beat(4)-2.16%
Min Revenue beat(4)-7.15%
Max Revenue beat(4)1.67%
Revenue beat(8)3
Avg Revenue beat(8)-1.03%
Revenue beat(12)7
Avg Revenue beat(12)-0.09%
Revenue beat(16)8
Avg Revenue beat(16)-1.07%
PT rev (1m)0.24%
PT rev (3m)9.49%
EPS NQ rev (1m)0%
EPS NQ rev (3m)13%
EPS NY rev (1m)0%
EPS NY rev (3m)9.54%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-4.69%
Revenue NY rev (1m)-0.08%
Revenue NY rev (3m)-1.27%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 72.67 | ||
| Fwd PE | 15.09 | ||
| P/S | 1.31 | ||
| P/FCF | 8.24 | ||
| P/OCF | 7.49 | ||
| P/B | 3.74 | ||
| P/tB | 14.69 | ||
| EV/EBITDA | 9.77 |
EPS(TTM)0.12
EY1.38%
EPS(NY)0.58
Fwd EY6.63%
FCF(TTM)1.06
FCFY12.14%
OCF(TTM)1.16
OCFY13.35%
SpS6.65
BVpS2.33
TBVpS0.59
PEG (NY)3.19
PEG (5Y)1.49
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | -0.5% | ||
| ROE | -1.58% | ||
| ROCE | 13.12% | ||
| ROIC | 10.19% | ||
| ROICexc | 14.74% | ||
| ROICexgc | 37.64% | ||
| OM | 8.16% | ||
| PM (TTM) | N/A | ||
| GM | 43.44% | ||
| FCFM | 15.92% |
ROA(3y)1.29%
ROA(5y)2.22%
ROE(3y)2.65%
ROE(5y)6.16%
ROIC(3y)11.39%
ROIC(5y)10.81%
ROICexc(3y)16.4%
ROICexc(5y)16.83%
ROICexgc(3y)42.48%
ROICexgc(5y)39.52%
ROCE(3y)14.67%
ROCE(5y)13.92%
ROICexcg growth 3Y-2.83%
ROICexcg growth 5Y10.17%
ROICexc growth 3Y-18.7%
ROICexc growth 5Y2.67%
OM growth 3Y-18.28%
OM growth 5Y8.55%
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y-0.83%
GM growth 5Y2.43%
F-Score6
Asset Turnover0.91
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.44 | ||
| Debt/FCF | 1.11 | ||
| Debt/EBITDA | 1.23 | ||
| Cap/Depr | 36.02% | ||
| Cap/Sales | 1.59% | ||
| Interest Coverage | 6.62 | ||
| Cash Conversion | 139.28% | ||
| Profit Quality | N/A | ||
| Current Ratio | 1.19 | ||
| Quick Ratio | 0.95 | ||
| Altman-Z | N/A |
F-Score6
WACC6.34%
ROIC/WACC1.61
Cap/Depr(3y)52.75%
Cap/Depr(5y)59.58%
Cap/Sales(3y)2.12%
Cap/Sales(5y)2.31%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)-72.75%
EPS 3Y-9.51%
EPS 5Y48.91%
EPS Q2Q%80.9%
EPS Next Y22.79%
EPS Next 2Y22.05%
EPS Next 3Y16.92%
EPS Next 5Y12.1%
Revenue 1Y (TTM)-11.03%
Revenue growth 3Y4.26%
Revenue growth 5Y4.55%
Sales Q2Q%-4.16%
Revenue Next Year-7.74%
Revenue Next 2Y-2.31%
Revenue Next 3Y-0.71%
Revenue Next 5Y0.04%
EBIT growth 1Y-13.58%
EBIT growth 3Y-14.8%
EBIT growth 5Y13.49%
EBIT Next Year92.06%
EBIT Next 3Y27.67%
EBIT Next 5Y20.74%
FCF growth 1Y85.57%
FCF growth 3Y-58.35%
FCF growth 5Y-17.41%
OCF growth 1Y65.23%
OCF growth 3Y-37.17%
OCF growth 5Y-5.14%